Posted 1 month ago | by Catoshi Nakamoto
The Financial Action Task Force (FATF) is expected to publish its long-awaited revised guidance for cryptocurrency firms this week.
Financial Action Task Force To Release Guidance On DEFI, NFTs, Crypto and Stablecoins
The guidance by FATF has been finalized for a risk-based approach to virtual assets according to a notice, published on the FATF website stating that the organization plans to publish an updated version on October 28th.
“This guidance that we finalized for a risk-based approach to virtual assets and investments will be published next week,” President Marcus Pleyer told CoinDesk during a press conference following a FATF meeting.
FATF is an international policy-making and standard-setting body, headquartered in Paris, France tasked with anti-money laundering (AML) compliance. The agency which acts as a global watchdog for AML released initial draft guidance for virtual asset service providers (VASPs,) or cryptocurrency firms in March. Although, it has been years in the making, starting from 2015 when FATF first recognized the cryptocurrency industry expressing it was taking a “risk-based approach.”
Then in 2018, FATF updated its guidance with Recommendation 15, expanding AML obligations to crypto businesses, including cryptocurrency exchanges, crypto transfer services, crypto wallets, and ICO/IDO issuers.
In 2019, FATF published an Interpretive Note to Recommendation 15 and revised its original guidance on virtual assets. The documents defined expected AML obligations for virtual assets service providers (VASPS), including customer due diligence or KYC, recordkeeping, transaction monitoring, requiring companies to report suspicious transactions.
According to Pleyer, the newly revised upcoming guidance provides further clarification on the definition of VASPs, stablecoins, NFTs and DEFI. Pleyer also mentioned FATF’s expectation that countries will implement standards for the so-called “Travel Rule” for cryptocurrency transactions “as soon as possible.”
The guidance is “likely to be comprehensive and difficult and expensive for the industry to fully comply with,” Jones told Coindesk.
According to a FATF review, published in July 2021, 58 out of 128 reporting countries are expected to apply FATF Recommendations to their crypto AML regulations.
As Bitboy Crypto first reported last year under the Trump administration, both FinCEN (Financial Crimes Enforcement Network) and the FATF are seeking to control unhosted or non-custodial wallets. FATF and FinCEN have both expressed in their view transactions using unhosted wallets increase AML/CTF risks. For those new to crypto, an “unhosted” wallet is a software where you generate your keys and you are in control of your funds. This embodies the entire ethos of cryptocurrency, stemming from the phrase, NOT YOUR KEYS, NOT YOUR CRYPTO.
If the cryptocurrency regulations in the U.S. do go into effect, as Bitboy Crypto warned from two insider sources in September of last year, it would mean crypto businesses would be forced to know every person their users’ crypto transactions, keeping logs, and verifying identities (KYC) even before a transfer can go through for sending crypto.
In December 2020, FinCEN issued a proposal of guidance called “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets,”
According to the proposal, if a single transaction or combined transactions exceed $10,000 within a 24-hour period, the bank, MSB, or Virtual Asset Service Providers (VASPs) will have to file a report with FinCEN and include information in relation to the transaction, the counterparty if applicable including their name and physical address as well as verification of the identity of its customer. In addition, If a transaction exceeds $3,000, banks and MBSs will be required to keep records of the transaction as well as verify the identity of the customer.
The U.S. SEC (Securities And Exchange Commission) has also recently announced its own intentions in the crypto space, with SEC’s Gary Gensler telling lawmakers that investor protections that apply to traditional securities and financial services should apply to crypto exchanges.
Meanwhile, as Bitboy Crypto reported, Congress is also focused on digital assets, at both the federal and state level. Bitcoin and cryptocurrency, in general, has attained the eyes of regulators worldwide, and the U.S. no exception.
According to a report from the U.S. Treasury Department as recently as May, the administration wants to put new provisions in place that would make it easier for the government to see money moving around, including digital currencies. As CNBC noted the report stated that cryptocurrencies pose a “significant detection problem,” allowing people to dodge or evade taxes. This same report noted that there should be mandatory reporting requirements for $10,000 to the IRS.
Even before the transition to the Biden administration, in March 2020, the U.S. Treasury had convened a meeting of industry thought leaders and compliance experts to “discuss supervisory and regulatory challenges facing digital assets, including cryptocurrency.” FATF’s decision to release guidance this week could cause volatility in the markets. However, this guidance is not yet legally binding in any way shape, or form. Regardless be prepared for rough seas following the release of this guidance proposal to cryptocurrency companies.
Bitcoin is currently trading at [FIAT: $63,185.40] UP +3.7% in the last 24 hours according to Coingecko at the time of this report.